> ## Documentation Index
> Fetch the complete documentation index at: https://docs.snek.fun/llms.txt
> Use this file to discover all available pages before exploring further.

# Bonding curve

> How token pricing works on Snekfun

# Bonding Curve

Every token on [Snekfun](https://snek.fun) is priced using a bonding curve — a mathematical formula that automatically sets the price based on supply and demand. There are no order books, no market makers, and no external price feeds.

## How it works

When a token launches, it starts at a fixed starting market cap of **2,550 ADA**. As people buy, ADA flows into the pool and the price rises. When people sell, ADA flows out and the price drops. Every trade is instant and always has liquidity available.

<Note>
  The bonding curve calculates the price automatically depending on the amount of ADA in the pool.
</Note>

## Graduation

When a token's market cap reaches **69,000 ADA**, it graduates from the bonding curve. At that point:

1. The bonding curve closes
2. A liquidity pool is created on **Splash DEX**
3. LP tokens are burned — liquidity is locked permanently
4. Trading continues freely on **Splash DEX**

## The 26x potential

The bonding curve is structured so that a token traveling from its starting market cap of 2,550 ADA all the way to the graduation threshold of 69,000 ADA represents a **26x increase in market cap** for the earliest buyers.

<Note>
  This does not guarantee a 26x return. Price depends on when you buy along the curve. Early buyers get a lower price and a higher potential upside — later buyers get a higher price with less room to grow before graduation.
</Note>

## Price impact

Every trade moves the price. Larger buys push the price up more than smaller ones. You can see the estimated price impact before confirming any transaction.

<Tip>
  If you're buying a large amount, consider splitting it into smaller transactions to reduce your average price impact.
</Tip>

## No liquidity risk

While a token is on the bonding curve, all liquidity is held in the Snekfun smart contract. You can always sell your tokens back into the curve at any time — there is no scenario where liquidity disappears from the smart contract.